Drivers of Performance Change During Privatization

42 Pages Posted: 30 May 2008 Last revised: 25 Sep 2008

See all articles by Christian O. H. Wolf

Christian O. H. Wolf

University of Cambridge - Judge Business School

Date Written: September 23, 2008


Privatisation is usually found to improve corporate performance, but individual firms vary greatly around the average outcome. This paper explores variables that moderate the impact of privatisation on corporate performance change, i.e. that determine the extent of privatisation-related improvements. To do so, I examine the impact of a broad range of transaction-related, firm- and country-level/institutional variables on seven different aspects of performance (profitability, efficiency, capital investment, physical output, employment, capital structure and dividend payout), based on a sample of privatisations in the global oil and gas industry. The results show significant differences between the performance categories, with no single variable driving performance changes across the board. On balance, however, the most relevant variables include existing share listings, the firm's stock market weighting, its operational profile, retained state ownership and control, and the country's economic and governance development. The results also suggest that findings from previous studies, which considered a smaller selection of potential performance drivers, might suffer from omitted variable bias.

Keywords: privatization, performance, corporate governance, institutional setting, oil and gas

JEL Classification: G30, L33, L71, M20

Suggested Citation

Wolf, Christian O. H., Drivers of Performance Change During Privatization (September 23, 2008). Available at SSRN: or

Christian O. H. Wolf (Contact Author)

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom


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